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Chapter 1: Q 2 (page 11)

Why might the rationality assumption explain why even a chicken farmer who has absolutely no humanitarian concern for chickens might seek to maintain very comfortable conditions for the birds?

Short Answer

Expert verified

Because a chicken with poor health will have no market value which will lead to a reduction in revenue and might also be a loss for the farmer.

Step by step solution

01

Step 1. Given Information.

The objective is to explain why a farmer with no humanitarian concern maintains very comfortable conditions for the birds.

02

Step 2. Reason.

A farmer with no humanitarian concern for chickens might still seek comfortable conditions for birds because if the health of a bird decreases it will result in a decrease in revenue for the farmers as well as the profit for them.

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Most popular questions from this chapter

For each of the following items, state whether a direct or an inverse relationship is likely to exist.

(a) The number of hours you study for an exam and your exam score.

(b) The price of pizza and the quantity purchased.

(c) The number of games the university basketball team won last year and the number of season tickets sold this year.

Why does the assumption of bounded rationality suggest that people might use rules of thumb to guide their decision-making instead of considering every possible choice available to them?

Review Figure, and then state whether each of the following paired observations is on, above, or below the x-axis and on, to the left of, or to the right of the y axis.

a. (-10, 4)

b. (20, -2)

c. (10, 0)

For each of the following approaches that an economist might follow in examining a decision-making process, identify whether the approach relies on the rationality assumption or on the assumption of bounded rationality:

(a) To make predictions about how many apps a person will download onto her tablet device, an economist presumes that the individual faces limitations that make it impossible for her to examine every possible choice among relevant apps.

(b) In evaluating the price that an individual will be willing to pay for a given quantity of a particular type of healthcare service, a researcher assumes that the person considers all relevant health care options in pursuit of his own long-term satisfaction with resulting health outcomes.

(c) To determine the amount of time that a person will decide to devote to watching online videos each week, an economist makes the assumption that the individual will feel overwhelmed by the sheer volume of videos available online and will respond by using a rule of thumb.

Given the function y=5x, complete the following schedule and plot the curve.

y
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